In March 2017, US President
Donald Trump issued his first
budget blueprint for fiscal year
2018. Titled America First, it
proposed cutting US foreign aid by nearly
one-third, or approximately $15 billion. It
expressed a collective judgment by many
voters that foreign aid fails to produce a
return on investment (ROI) for taxpayers.

Like past administrations, Trump’s takes
a “salami slice” approach to budget reprioritization,
slashing many agency budgets
across the board. The administration has
also contemplated moving boxes around on
organization charts. Both approaches aim to
fix the “hardware” of development (budget
and organization structure) but fail to change
the “software”—the culture, mind-sets, and
underlying beliefs of development professionals
both in and out of government.

Instead, the administration should apply
a “shared value” test, by pursuing trade and
foreign policy opportunities that further US
interests while also furthering international development.
Harvard Business School’s Michael
Porter defines shared value for corporations as
finding business opportunities in solving social
problems. Doing so will make foreign assistance
more politically sustainable by driving better
deals for the American people while improving
lives in the developing world.

Promoting American Values

The Marshall Plan set the gold standard
for international development deals that
benefit aid recipients while also furthering
long-term US diplomatic interests. It rebuilt
war-torn Europe after World War II;
created unprecedented peace, security, and
prosperity for the United States and Europe;
and paved the way for some of the highest
economic growth on record.

During the Cold War, we could easily explain
why we gave foreign aid: to buy loyalty
and cooperation, advancing our interests
against those of our rival, the Soviet Union.
We also used it to lay the foundations of the
current international order—including the
United Nations, the World Bank, and the
International Monetary Fund. Since the financial
crisis of 2008, however, American
voters have turned inward, returning ever
more isolationist members to Congress and
electing an “America First” president.

Today’s fast-changing, multipolar world
makes our interests more complex and
harder to articulate. China and other rising
powers are actively working to create an
alternative international order, starting with
initial capital investments in the New Development
Bank and the Asian Infrastructure
Investment Bank, at $50 billion and
$100 billion, respectively. While both banks
have laudable goals—including supporting
collaboration across the Global South and
promoting sustainable development—they
nonetheless represent a direct challenge to
the liberal democratic order set up by America
and its allies. And while China’s foreign
aid spending still sits at half of annual US
spending (even with the administration’s
proposed cuts), China’s investments have
grown by more than 20 percent each year
since 2005. In 2015, China committed $20.9
billion of $83.5 billion total funding for African
infrastructure, making it the largest
foreign investor in these types of projects.

China moves much faster and invests in
more targeted ways than the United States,
in part because the Chinese government will
champion specific industries and companies
and overlook corruption and human rights issues.
America and the Western powers cannot
and should not compete on these terms. We
should play to our strengths: transparency,
rule of law, dynamism, and entrepreneurship.
When we lead by example, transparently investing
our development dollars to build more
vibrant economies, we set a
precedent that partner governments
often follow.

Applying shared value makes it easier to find and explain international development in the national interest, because it ties foreign aid to America First foreign policy and trade goals while solving social problems in the developing world.

A Four-Step Approach to Reform

The Trump administration should radically re-think international development by undertaking four recommendations.

First, align spending with American security interests
and local needs. America First international
development programs would address
security problems rooted in underdevelopment
and advance economic development
that makes it easier for US companies to do
business. Take the administration’s goal of
combatting violent extremism. Historically,
spikes in unemployment among young men
lead to higher levels of violence. Recent estimates
indicate a supply-and-demand mismatch
in world labor markets: a surplus of
90-95 million low-skilled workers worldwide,
while employers need 90-95 million
skilled workers. The world’s youth will use
their pent-up kinetic energy for good or
evil, and the wider this youth-skills gap,
the more likely that they will get lured into
danger and violence.

In 2016 my firm, CollaborateUp, worked
with an international aid organization in a
key allied Muslim-majority country. (Due to
the politically sensitive nature of the work,
the client asked that we withhold their
name.) We helped it partner with the national
government to create ways of tackling
sectarian violence and international
terrorism. The organization listened to the
national government and responded to their
needs—a shockingly obvious yet infrequent
act in international development—and subsequently
engaged local, regional, and international
organizations; employers; local
governments; and educators to generate
innovative ways for poor and vulnerable
people to enter the formal economy. The
process produced a variety of innovative
ideas, from micro-franchising that would
create a cohort of micro-entrepreneurs to
ways of accelerating curriculum development
in high-growth fields. These kinds of
efforts help close the skills gap for vulnerable
populations, including youth, thereby
investing in a more stable and less violent
future—the foundation of shared-value ROI.

Second, focus on solvable problems. Pick a
set of priorities—the UN’s Sustainable Development
Goals (SDGs), for example—and
find the solvable problems within them.
Some SDGs—“No Poverty” or “Reduced
Inequalities”—may seem too vague or openended,
but others—“Decent Work and Economic
Growth” and “Clean Water and Sanitation”—have clearly defined outcomes and
known solutions.

Our client, Global Alliance for Children,
a growing coalition of foundations, governments,
universities, and corporations, works
to ensure that children realize their full potential
through nurturing family care. While
the United States and Western Europe have
moved away from institutionalizing children
in orphanages, it remains the default
in many developing countries. More than 80
percent of children in these facilities have
living family members who, with better access
to basic services, would care for them.
When aid organizations tackle such solvable
problems, they help stabilize post-conflict
countries and check the ambitions of other
rising regional powers, such as China.

Third, institutionalize cocreation to solve market
or structural failures. Most development problems
come from a market or structural failure.
In India, for example, more than 564 million
people still openly defecate. A lack of affordable
household-owned latrines keeps effective
sanitation beyond the reach of the poor. This
creates immense social and public health burdens:
More than 188,000 children under the
age of 5 die each year from diarrhea alone—the highest rate in the world—and women and
girls live under the constant threat of violence
when they go to the toilet, trapping them at
home instead of going to school or work.

To address this problem, Population Services
International and the Bill & Melinda
Gates Foundation worked with local entrepreneurs
to assemble everything needed
for a family to buy and maintain a toilet for
their home, including financing, local masons,
installation, and cleaning. Together
they created a profitable sanitation market
that now enables even the poorest consumers
to select and purchase sanitation goods
and services from a variety of choices.
Unfortunately, the existing culture in international
development inhibits cocreation.
Many development professionals distrust
companies, fearing that profit will subvert
mission. When engaging the private sector,
agencies often revert back to traditional procurement
rules that treat companies more
like vendors than partners.

It doesn’t have to be this way. USAID
has wide latitude and a variety of purchasing
and partnering methods to choose from,
but most partnerships use only a few mechanisms—namely, grants, contracts, and cooperative
agreements. As creative as USAID
staff and its partners can be, their ideas end
up crushed by the grindstone of its traditional
procurement culture.

Instead, the administration should retrain
procurement professionals and mission
leaders to take full advantage of the
variety of partnership methods available,
combine foreign assistance with trade assistance
and finance, and treat innovative
development programs less like grants and
more like investments.

Fourth, set clear exit strategies, pivoting from
philanthropy to local ownership. Countries and
their citizens want trade more than they want
aid. Whenever possible, international development
programs should transition countries
from aid recipients to trading partners.
On his first day on the job as USAID’s administrator,
Mark Green said, “The purpose
of foreign assistance should be ending its
need to exist.” Green recognizes that ending
the need for aid requires exit strategies
that bridge to markets—and that takes more
than shifting budgets or org boxes. It takes a
reboot of the software of development: the
culture, traditions, and beliefs that pervade
the whole development community both inside
and outside of government.

If the White House could successfully
imbue the culture of development with a
shared-value ROI mind-set and institutionalize
reform in procurement policy, it would
transform US development aid for the better.
And years from now, the administration
could look back on a track record of having
struck better development deals and a legacy
that made America safer, accelerated global
and American prosperity, and saved the taxpayer
money. That’s an America First development
deal well worth crafting.

Richard J. Crespin is CEO of CollaborateUp, a consultancy working to accelerate collaboration among businesses, governments, and nonprofits to solve big social problems at lower cost and in less time than traditional approaches. He also serves as a senior fellow for the US Chamber of Commerce Foundation, a senior associate at the Center for Strategic and International Studies, and an adjunct professor at the George Washington University, where he teaches public-private partnerships.